Prader-Willi Syndrome (PWS) is a rare and incurable congenital neurodevelopmental disorder, resulting from the absence of expression of a group of genes on the paternally acquired chromosome 15q11-q13. Phenotypical characteristics of PWS include infantile hypotonia, short stature, incomplete pubertal development, hyperphagia and morbid obesity. Hypothalamic dysfunction in controlling body weight and food intake is a hallmark of PWS. Neuroimaging studies have demonstrated that PWS subjects have abnormal neurocircuitry engaged in the hedonic and physiological control of feeding behavior. This is translated into diminished production of hypothalamic effector peptides which are responsible for the coordination of energy homeostasis and satiety. So far, studies with animal models for PWS and with human post-mortem hypothalamic specimens demonstrated changes particularly in the infundibular and the paraventricular nuclei of the hypothalamus, both in orexigenic and anorexigenic neural populations. Moreover, many PWS patients have a severe endocrine dysfunction, e.g. central hypogonadism and/or growth hormone deficiency, which may contribute to the development of increased fat mass, especially if left untreated. Additionally, the role of non-neuronal cells, such as astrocytes and microglia in the hypothalamic dysregulation in PWS is yet to be determined. Notably, microglial activation is persistently present in non-genetic obesity. To what extent microglia, and other glial cells, are affected in PWS is poorly understood. The elucidation of the hypothalamic dysfunction in PWS could prove to be a key feature of rational therapeutic management in this syndrome. This review aims to examine the evidence for hypothalamic dysfunction, both at the neuropeptidergic and circuitry levels, and its correlation with the pathophysiology of PWS.